New Jersey Close to Online Gambling (Again)

Well now everything dies baby that’s a fact But maybe everything that dies someday comes back Put your makeup on fix your hair up pretty And meet me tonight [online?] in Atlantic City

– Bruce Springsteen, “Atlantic City”

An online gambling bill that has died twice before has come back. On Thursday, December 20th, New Jersey’s State Senate passed an online gambling bill — by a vote of 32-4, nearly identical to its vote on a 2011 bill that was vetoed by New Jersey’s Governor Chris Christie. Another version of the bill died in May 2012, without a full Senate vote. The new bill had passed the assembly two days before, on December 18th.

The bill, amending the NJ Casino Control Act, would permit Atlantic City casinos to host websites offering poker and casino games — and any game permitted at the casinos themselves. Governor Christie now has 45 days to either sign it, veto it or do nothing and allow it to become law when the 45 days lapses.

Christie had vetoed the original bill in March 2011, citing “legal and constitutional concerns.” Back then, Christie was particularly opposed to that bill’s provision of subsidies to horse racing purses. He also cited concerns that the bill might violate New Jersey’s Constitution, which only permits casino gambling in Atlantic City: he labeled a “legal fiction” the bill’s presumption that all internet bets would be deemed to originate in Atlantic City.

The bill now sitting on Governor Christie’s desk has resolved both of those issues. A provision permitting $30 million in racing subsides was removed from the bill in December. At the same time, the legislature secured expert opinions that so long as the servers processing the bets were located in Atlantic City, New Jersey’s constitution wasn’t violated. (There is analogous precedent in the Interstate Horseracing Act — which allows states to decide whether bettors can bet from home phones and computers. Under the IHA, state legislatures were permitted to adopt a similar “legal fiction” that bets, known as Advanced Deposit Wagers, occur at tracks and OTBs even though bettors are at home.)

There is thus reason to believe that Christie may be more favorable to the bill this time. In addition, in December 2011, the U.S. Department of Justice announced its opinion that the U.S. Wire Act did not prohibit states from licensing intrastate online casinos — thus opening the door to state licensing and multi-state compacts.

If passed, the bill would permit licensed Atlantic City casinos to create online operations, provided that all “equipment used . . . to conduct Internet gaming” is on their own “premises.” Other significant elements of the bill:

The New Jersey Division of Gaming Enforcement will create standards for software and equipment used in Internet gaming, including “mechanical, electrical or program reliability, security against tampering, the comprehensibility of wagering, and noise and light levels.”

Casinos would be required to “verify” that a player is “physically present” in New Jersey at every log-in: this could create challenges for geo-location software, which is often accurate only to several miles (at best). Philadelphia, for instance, is just across a river from New Jersey, and some of the state’s larger cities are jogging distance from New York. (Mobile gaming by contrast, which can use GPS tracking, can be far more accurate.)

The bill does not require age verification. While it prohibits casinos from permitting bettors under 21, it creates a defense where a bettor has claimed to be 21 and the casino accepted that in good faith. It is unclear whether the Division of Gaming Enforcement would require age verification software, as is commonly required, for instance, under European regimes and the Delaware online gaming statute signed this summer.

About The Author

Ken counsels clients on complex issues involving information privacy and data law, online liability, consumer regulatory and gaming law, including regulatory response, and adherence to self-regulatory guidelines for online advertising. Ken has had more than twenty years of experience in high-profile regulatory, in-house and private practice roles, including as Chief of the New York Attorney General’s Internet Bureau. He is one of the nation’s leading authorities on the relationship between emerging advertising technologies and online privacy.